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Bac 401 Audit Practice And Investigation Question Paper

Bac 401 Audit Practice And Investigation

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2011

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2011/2012
MOMBASA CAMPUS
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE

BAC 401: AUDITING, PRACTICE AND INVESTIGATIONS
DATE:
Tuesday 6th December 2011
TIME: 8.00a.m-10.00p.m
INSTRUCTIONS
Answer ALL questions.
Question One
a) Define the term risk-based auditing.

[2marks]
b) Explain what is meant by the terms:
i)
Inherent risk
ii)
Control risk
iii)
Detection risk

[3marks]
c) State and explain the control procedures you would undertake in an accounting and
internal control system.

[10marks]
d) List and briefly explain the limitations of internal control system.
[5marks]
Question Two
a) A medium size firm has been your client for several years has changed from manual
accounting system to a computerized one. State and explain the factors which will take
into account when planning the first audit under the new system.
[10marks]
b) List and briefly explain FIVE advantages of Computer-Assisted Audit Techniques.
(CAATS).

[5marks]
Page 1 of 2

Question Three
In carrying out an audit, the independent auditor must consider the reliability of audit evidence.
Among other things the auditor is required to pay attention to reliability of evidence from third
parties and specialists. The auditor is able to verify and ascertain the reasons for material
differences between balances stated in the books of the client and those available from external
source.
Required
a) Give concise definition of:
i)
Audit evidence
ii)
Third party
iii)
Specialist evidence

[6marks]
b) Detail the procedures you would follow in verifying material differences stated in the
above preamble, with regard to:
i)
Matters confirmed in the letter, the auditor receives direct from the bank.
ii)
The replies to a debtor’s circularization.
iii)
Valuation of the company’s property by a valuer.

[14marks]
Question Four
a) Define what is meant by Management Letter.

[1mark]
b) Explain the purpose of a Management Letter.

[4marks]
c) Briefly explain the following types of audits:
i)
Value for money audits
ii)
Management audits
iii)
Environment report
iv)
Tax audits.

[10marks]

Page 2 of 2

Bac 401 Audit Practice And Investigation Question Paper

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